Which statement best describes a sole proprietorship?

Which statement best describes a sole proprietorship?

• A. A business owned by two or more partners sharing profits
• B. A nonprofit organization
• C. Owned and operated by one person who typically has complete control over the business
• D. A legal entity separate from owners with limited liability

Answer: (C)

Single ownership and direct control define a sole proprietorship. There is no separate legal entity between the owner and the business, so one person makes all decisions, runs daily operations, and receives all profits while personally bearing losses and debts. This setup contrasts with partnerships (multiple owners), nonprofits (not-for-profit purpose), and entities like corporations or LLCs that are separate legal entities offering limited liability. So the best description is that it is owned and operated by one person who typically has complete control over the business.

Single ownership and direct control define a sole proprietorship. There is no separate legal entity between the owner and the business, so one person makes all decisions, runs daily operations, and receives all profits while personally bearing losses and debts. This setup contrasts with partnerships (multiple owners), nonprofits (not-for-profit purpose), and entities like corporations or LLCs that are separate legal entities offering limited liability. So the best description is that it is owned and operated by one person who typically has complete control over the business.